Britain’s investment management sector runs around £1.2tn on behalf of European investors. Asset managers operating in the UK are permitted to sell funds across the EU under so-called passporting rules.
But Steven Maijoor, chairman of the European Securities and Markets Authority, the pan-European regulator, said the UK’s access to fund passporting arrangements would be “at risk” following a British exit, or Brexit. “There will be a big question mark about UK-registered investment [companies], UK-registered funds and fund prospectuses approved in London. Their legal status will be unclear in the event of a Brexit. This will result in uncertainty that will not be easily resolved in a couple of months,” he said.
Uncertainty over the terms of the UK’s post-Brexit relationship with the EU has clouded analysis of how investment management might fare.
According to Moody's, the credit rating agency, there would be “no immediate changes” to asset managers’ operations as the UK would face two years of negotiations with the EU. Many large international managers with operations in the UK, such as BlackRock and Vanguard, also house their fund ranges in either Dublin or Luxembourg.
Marina Cremonese, vice-president at Moody’s, said: “The management and marketing passports of Dublin and Luxembourg funds should not be compromised, which mitigates the risks and costs associated with an exit of the UK from the EU.”
Mr Maijoor, however, cautioned that there were still many funds, investment companies and prospectuses registered in the UK that could be negatively affected by a Brexit.
The Investment Association, the trade body representing the UK’s asset management industry, added: “A full UK Brexit would be profoundly disruptive for the export of asset management services and products. Leaving in such circumstances would not be a desirable outcome.”
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